Benefits and Business

In its 2008 annual Job Satisfaction Survey Report, the Society for Human Resource

Management (SHR M) reported that for the past five years, employees rated

compensation and benefits among the top three aspects most important to their

job. But despite the importance of these aspects, employee satisfaction with their

compensation and benefits packages remains low. According to a Conference Board

report, “employees are least satisfied with their companies’ bonus plans, promotion

policies, health plans and pensions”. Employers are missing critical opportunities to

maximize employee job satisfaction and other organizational outcomes through their

total rewards programs.1

In the book Dynamic Compensation for Changing organizations: People, Performance

& Pay, The Hay Group asserts that traditional pay structures no longer keep

pace with the emerging, strategy-focused organizations that exist in today’s

globally competitive market. “What shifted were organizational work values, work

cultures and business strategies. Although they have been largely overlooked,

dramatic changes in the organizational rules have frequently rendered traditional

compensation strategies ineffective. Employees today are expected to work in teams

rather than solely on their own. They are expected to keep learning new skills and

to assume broader roles. They are expected to take more risks and responsibility for

results. As a consequence, we are slowly coming to the realization that we may be

paying for the wrong things, sending inconsistent messages about the company to its

employees, or creating artificial expectations of continued advancement and raises,

no matter how well the company performs.”2

Furthermore, in its publication Implementing Total Rewards Strategies, SHR M

notes that “the right total rewards system—a blend of monetary and non-monetary

rewards offered to employees—can generate valuable business results. These results

range from enhanced individual and organizational performance to improved job

satisfaction, employee loyalty and workforce morale.”3

Today, HR professionals are responsible for programs far beyond the profession’s

administrative personnel roots. They are expected to measure the success or failure of

HR practices based on the achievement of organizational outcomes. Brand identity,

bottom-line profitability, employee job satisfaction and increased management focus

are all outcomes that can be achieved in part through an organization’s total rewards

program. This case examines two very different organizations and how they align

their total rewards programs with their organizational goals and values.

Aflac Insurance

2 © 2009 society for Human Resource Management. sandra M. Reed, sPHR

Company Information

Aflac is a Fortune 500 insurance company founded in 1955 by three brothers, John,

Paul and Bill Amos. Today, Aflac employs more than 4,500 people and has more

than 71,000 licensed independent agents throughout the United States and Japan.

The following is an excerpt from the New York Stock Exchange business summary.

“Aflac Incorporated is a general business holding company and acts as a management

company, overseeing the operations of its subsidiaries by providing management

services and making capital available. Its principal business is supplemental health

and life insurance, which is marketed and administered through its subsidiary,

American Family Life Assurance Company of Columbus (Aflac), which operates

in the United States (Aflac U.S.) and as a branch in Japan (Aflac Japan). Aflac’s

insurance business consists of two segments: Aflac Japan and Aflac U.S. Aflac Japan

sells cancer plans, care plans, general medical indemnity plans, medical/sickness

riders, living benefit life plans, ordinary life insurance plans and annuities. Aflac U.S.

sells cancer plans and various types of health insurance, including accident/disability,

fixed-benefit dental, sickness and hospital indemnity, vision care, hospital intensive

care, long-term care, ordinary life and short-term disability plans.”

AFLAC Corporate Philosophy

“Since its beginning, Aflac has believed that the best way to succeed in our business

is to value people. Treating employees with care, dignity and fairness are founding

principles of Aflac.”

Aflac’s mission

To combine innovative strategic marketing with quality products and services at

competitive prices to provide the best insurance value for consumers.

© 2009 society for Human Resource Management. sandra M. Reed, sPHR 3

Guiding Principles

To offer quality products and services at competitive prices and use new technology

to better serve our policyholders.

n Build better value for our shareholders.

n Supply quality service for our agents.

n Provide an enriching and rewarding workplace for our employees.

The case at AFLAC

With a desire to be an employer of choice, Aflac Insurance is no stranger to the

competition for talent among employers in the United States. In fact, according

to the Bureau of Labor Statistics (BLS), the unemployment rate in the insurance

industry was at 3.3 percent in March 2008, a number consistently below the

National and state levels in other industries (Exhibits A and B). This makes finding

and retaining qualified individuals to deliver positive results to shareholders an

ongoing challenge.